For Ninth District Indian reservations, economic development means independence and self-reliance

There are over 150,000 American Indians living on or near 45 reservations
in the Ninth District—and reservation populations are on the rise.
Those reservations, ranging in size from 1 square mile to over 4,200
square miles, comprise a total of about 33,000 square miles, roughly
the size of Indiana and about 8 percent of district land. Taken together,
the reservations would seem to pack a powerful economic punch.

But the reservations are not joined, neither by geography, economy
nor, necessarily, by culture. Geographically, Ninth District reservations
range from the sparseness of the Plains states to the bucolic lands
surrounding the Great Lakes. Economically, while some reservations
rank with the poorest areas of the country, others have virtually
wiped out poverty since the advent of gambling casinos, and still
others are operating multi-million dollar manufacturing plants.

Also, the assumption that one tribe is culturally the same as
another tribe simply because they are both American Indian is like
assuming that Spaniards are the same as Germans because they are
both European, says Karl Stauber, vice president at the Northwest
Area Foundation, a St. Paul-based philanthropic organization that
is active in Indian economic development issues. He says that northwestern
America, inclusive of the Ninth District, contains more than 70
different Indian cultures.

New SBA office formed to promote American Indian economic development

An informal sampling of reservations in the Ninth District
found that most are discussing ways to encourage private entrepreneurship
in addition to increasing and expanding tribal ventures. To that
end, Pete Homer Jr. hopes he can be of assistance. Homer was appointed
earlier this year to direct the Native American Affairs Office of
the Small Business Administration (SBA) in Washington.

The newly formed SBA Native American office is the first time
SBA has opened an office explicitly for Indian business, and Homer
says that as well as serving as a resource and planning center for
Indian business, he wants his office to work as an advocate of Indian
economic development. "I want it to be known around the country
when a business gets a loan and is rated," by SBA, Homer says. "That's
a heck of an accomplishment," he says, considering the agency's
extensive approval process.

Homer is infectiously upbeat about the future of economic development
on the nation's reservations, which, after years of almost exclusive
government dependency, have been making relative strides into the
business world. He lists tribal construction and ownership of a
new hotel in Santa Fe, resort ownership by tribes in the Northwest,
tribal manufacturers in Montana and North Dakota and, of course,
casino gambling.

Homer views casinos as a means for future economic development
and he hopes that development is based on a new measure for success:
profits, not necessarily jobs. Too often, he says, many reservations
understandably have immediate job creation as their main goal. But
because many reservation businesses are operated by tribal governments,
the goal of job creation is sometimes politically motivated, he
says. More important than jobs is the long-term financial viability
of a business; the jobs will follow, he says.

One of the long-standing economic development issues that tribes
and individual Indians have had to contend with is the scarcity
of capital for reservation investment, and Homer hopes his SBA office
can be of assistance in that regard. "I know a lot of Indians out
there that want to go into business. They've got the experience,
but they don't have the capital."

Financial institutions are often reluctant to lend on the reservation
because much reservation land is held in trust and it cannot be
used as collateral. Also, because of jurisdictional questions, non-Indian
businesses often cannot collect on bad debts within reservations.
The Lakota Fund, a micro-enterprise loan fund developed on the Pine
Ridge Reservation in South Dakota, was formed to address the problem
of capital inadequacy.

Private development encouraged, with emphasis on cultural values

Lack of capital is part of the problem, acknowledges Sherry Salway
Black, vice president of the First Nations Development Institute,
a private organization based in Virginia that is working to promote
and expand economic development on the nation's reservations. But
beyond capital, another major concern for tribes is the ownership
status of reservation land.

Between 1887 and 1934, in an effort to open reservation lands
to development, Congress—under the Dawes Act—allowed non-Indians
to purchase reservation land that was not specifically allotted to an
individual Indian. Also, non-Indians were allowed to purchase Indians'
allotments, and many were sold unwittingly. Because of that era, about
80 percent of the nation's reservation land is "fractionated," according
to Black; that is, the land is owned by both tribal members and non-Indians,
as well as by many of the descendants of the original purchasers, making
development almost impossible because of multiple ownership.

"The Dawes Act is the most devastating piece of legislation that
still affects us today," Black says. Reservation land consolidation
is at the forefront of First Nations' efforts. Other First Nations'
projects include numerous funding and marketing plans for reservations
throughout the Ninth District, as well as sponsorship of a graduate
business program through the Carlson School of Management, University
of Minnesota. Under the program, students are required to work for
a reservation following completion of the degree program.

This spring, students sponsored by First Nations presented a panel
discussion on the issue of Indian women in business. One member
of the panel, Gae Veit, owner of Shingobee Builders of Loretto,
Minn., said one of the biggest reasons for her success was an informal
network of Indian-owned businesses that met regularly to provide
support and information. That network grew to become the Minnesota
American Indian Chamber of Commerce, and Veit now serves on its
board of directors.

One element that all panel members discussed was the importance,
both for Indian individuals and for their businesses, to retain their
sense of cultural identity. First Nations adheres to that philosophy,
according to Black. The Institute, which—as part of its mandate—receives
no federal funding, was founded in 1981 on the principle of local vs.
federal control and cultural values over purely economic considerations.

A recent survey by First Nations of America's tribes revealed
that most prefer a "holistic approach to development, which is culturally
appropriate and ecologically prudent and which encourages human
development as it fosters capital development," according to the
Institute's Business Alert. For example, while the
Bureau of Indian Affairs (BIA) wants to use toxic herbicides to
control leafy spurge, a noxious weed that has taken over a large
section of productive range land on Montana's Fort Belknap Reservation,
local tribal officials want to use the tribe's sheep to eat the
plant and reduce its threat.

This move to greater local autonomy of reservation business has
been occurring over the past 10 years as tribes try to distance
themselves from traditional BIA control, Black says. And that desire
for local autonomy, with its emphasis on tribal values, is more
than just a nod to cultural preservation, it is the foundation for
economic independence, according to Terry Anderson, professor of
economics at Montana State University in Bozeman and senior associate
with the Political Economy Research Center (PERC), a Bozeman-based
institute of public policy analysis.

PERC recently published a series of papers on the subject of property
rights and Indian economic development, and research shows that
there is a link between cultural values and successful economic
development efforts. One paper, by Stephen Cornell and Joseph Kalt,
from PERC's Property Rights and Indian Economies, shows
that many of the most economically developed Indian reservations
are those that have retained their historical tribal organizations
and values.

Traditional studies of Indian development by non-Indians have
"tended to view cultures other than Western cultures as obstacles
to development," the authors write. But a study of American Indian
cases shows that culture is a critical factor of success, according
to the authors. "This suggests that tradition and culture can't
be ignored," Anderson says.

In addition to capital formation and fractionated land, another
development hurdle for many reservations is their geographic location,
according to Michael Bongo, director of Community Outreach for Grand
Metropolitan of Minneapolis. This is especially true of many Upper
Midwest reservations, he says.

Bongo, a member of the Leech Lake Indian Reservation in northern
Minnesota, led a group of Grand Met officials to the reservation
late last year to discuss the feasibility of a food processing plant
on the reservation. Eventually, despite the tax breaks that the
reservation could give because of its sovereign status, Grand Met
had to forego plans for a plant because of high transportation costs,
Bongo says. Raw materials would have to be shipped long distances
onto the reservation, and the finished product would be far from
a major retail or transportation center.

But despite this failed attempt at reservation development, Bongo,
who directs Grand Met's training efforts for low-income, inner-city
workers, believes that there is much hope for reservation economies—and
the key will be improved training and education on the reservation.
Bongo recalls that in his youth, training often meant learning a trade
or skill that had little application on the reservation. Today, tribal
colleges are offering broader training, including emphasis on business
and entrepreneurism.

First Nations' Black also says that tribal colleges are crucial
to American Indians' future. "They are the most important social
change element on the reservations," she says. Black is especially
complimentary of the many tribal colleges that lie within the Ninth
District, adding that they will not only lead their own reservations
in the future, but their expected successes will likely impact reservations
across the country.